The Muir Russell Budget

In December 2009, Acton sent Muir Russell an email agreeing that Muir Russell would lead the inquiry. The language of the email is not definitive, but gives the impression that a budget of £ 40,000 was contemplated. (Excerpt below, see link for “full” agreement.)

As noted in correspondence on the earlier thread, Acton referred to an email sent earlier that day. David Holland sent a supplementary request for the earlier email (as it pertained to the contract). The University denied that it possessed the email.

Last month, Holland obtained the final cost of the Muir Russell inquiry – nearly £300,000.

While the increase in expenditures is paltry compared to Muir Russell’s oversight of Holyrood construction, which increased 10-fold from £40 million to £414 million, Muir Russell doesn’t seem to have lost his reverse Midas touch.

Muir Russell personally collected the amount that the university seems to have contemplated for the entire inquiry, but, as noted elsewhere, was not sufficiently interested to even attend the only two interviews with Jones and Briffa after the composition of the panel was announced in Feb 2010, leaving the interviews to Geoffrey Boulton, the most controversial participant on the panel.

“The secretarial line item alone exceeded the entire original estimate”
Erm… We don’t know what the entire original estimate was, only that it was obviously a damn sight more than one single person’s fee.

Not one of you could work that out. Not one of you brilliant inquiring minds. Not a peep. Oh dear.

I work in architecture here in Canada. Construction management has been a popular option for the last 10 years. In my experience it almost always serves one of a couple reasons:

-Used to give a low first cost estimate, to get a project approved when the owner or board is concerned over cost.
-Used to give a construction firm additional power over design and material choices to maximize profit.
-Used by a construction group to avoid going to a full general construction tender. Mostly only subtrades are tendered and the tenders are handled by the manager/contractor and is ripe for abuse in giving contracts to “friends”.

That is not to say it never works. There are several situations that it can work well for. But mostly it is used for the wrong reasons and makes things worse and not better. But when a contractor says “it is cheaper to build this way”, many times people just accept it without question, because it is the answer they wanted to hear. One can see the parallels to climate statistics.

It is another case of the right tool for the job, and people who are suggesting it usually are doing it for personal reasons and not best fit to circumstances.

It’s quite similar to the fiasco the City of Boston had with respect to the Big Dig. It was sold as a $2.2 billion project and ballooned to a $15+ billion project. The government was sure they were getting ripped off by the contractors, and hired KPMG to do a multi-million dollar audit (my brother was on one of the auditing teams). Rather than identifying savings, KPMG found that the city was delinquent on ~$1B.

In a general construction, or design/bid/build, the projects are tendered and the contractor is contractualy obligated to build it for the price he tendered. He can ask for more money only if he shows that something has changed from the original bid.

In construction management, you usually don’t agree on an exact price. You hire a manager to oversee the project and deal with all costing and design issues. The obvious downside is that there is no solid price at the start and the price given for the project is just a rough estimate (in many cases the project isn’t even fully designed yet). It is a model that is very dangerous as it is essentially approving a project with no guarantee of cost.

These are the general concepts, but a specific contract could be wrote any way you want as long as everyone will sign it.

Not sure if this is editorialising too much, but it did strike me that the UEA must have had at least a cursory glance at Russell’s CV before engaging him, so it is hard to see how they could have been unaware of the Holyrood shambles. It is tempting to conclude that they deliberately went for the most inept and incurious of the many inept and incurious members of the “great and the good”.

Impressive. I have managed many consultancies on behalf of government bodies, and would never be able to get away with a document like this as an explanation of where the money went. Where is the breakdown of the fees paid to members of the inquiry? What on earth did they spend over 50 grand on under the ‘website management, report production and media advice’ heading?

This scrap of paper has not the faintest resemblance to financial accountability. The FOIA request should include requiring a proper breakdown of the expenditure.

“It is tempting to conclude that they deliberately went for the most inept and incurious of the many inept and incurious members of the “great and the good”.”

———————————————–

I do not think so. IMHO they deliberately went for the most skillful practitioner of the black art of justifying a pre-determined outcome and at the same time clearing all involved of any wrongdoing, including himself.

If you have time, read his performance in front of a QC at the Holyrood Inquiry:

“Teflon-man” certainly. But when someone like Russell emerges with a good reputation after something like Holyrood there are others that know where bodies are buried. This can help to keep things on track in the next job. Boulton in particular was no accident.

“Teflon-man” certainly. But when someone like Russell emerges with a good reputation after something like Holyrood there are others that know where bodies are buried. This can help to keep things on track in the next job. Boulton in particular was no accident.

Ot perhaps Russell was no accident, if the initial contact from UEA was throught Boulton.

Last year I produced a 160-page research report for a major bank. Design and production costs plus 1000 colour hardcopies amounted to about £5000.

A website costs almost nothing to register. The inquiry one would have needed a fairly standard web designer/programmer to work on for a week or two. Someone would have needed to upload documents as and when needed. Let’s say £10000.

So how they spent £52k on the report and the website and media advice is beyond my comprehension. Can we get the invoices? That media advice must have been pretty expensive.

Ahhh, Fred, the 54K is for spin management and damage control, of which we have seen very little. Yet. I’m sure Pendragon’s machine has some misinformation queued up to feed the seemingly ever-forgiving bandwagon press.

Can it be that the team members pocketed 25k each? (25 ~= (147-40)/4) (The team members being: Geoffrey Boulton, Peter Clarke, David Eyton, and James Norton; and team supremo, Russell taking 40k). (With 7k left to buy carbon offsets for the team?) Clearly team ‘independence’ did not come cheap.

David Eyton was a senior BP executive at the time. It’s hard to believe that he would have submitted an invoice for services rendered. It would be interesting to find out exactly how much Eyton was paid personally. BTW minutes of one Muir Russell meeting said that Eyton had made a synopsis which would be made available when the Report was published. Hasn’t turned up.

If Eyton was earning a little extra money by moonlighting at the University of East Anglia, shouldn’t he give BP a refund for the time that he didn’t spend on his BP duties. As I recall, BP had a lot on its plate last spring and Eyton had personal experience with Gulf deepwater – shouldn’t it have been all hands on deck?

I also suspect that Eyton brought David Walker (a former BP hand) on board to salvage the inquiry. From the minutes, it appears that Muir Russell was well on his way to producing something like the Oxburgh report and that Walker was hired to produce something that at least had the appearance of a report.

So, if Eyton’s chunk went unclaimed, Boulton, Clarke, and Eyton move up to 35k, as the review team. (I assume that Walker was paid through the report production line item).

I suspect that Eyton’s synopsis was probably on ‘seals, sea otters and walruses’ and Walker decided to ditch it quietly. ‘Very well written summary, sir. Unfortunately Muir imposed a page limit. We’ll use it as the foundation of the next report’).

Can you tell me why my posts from the 28th of Feb are still awaiting moderation on March 3rd Steven (as if)? What exactly is so subversive about pointing out the obvious difference between a fee, some fees, and an overall budget?

Being someone who has headed up small and large consulting firms for almost 20 years, and participated in/headed up many government and university enquiries, audits and investigations I read the language of the email excerpt differently from the OP.

If I were the consultant to whom the email is addressed I would read the 40k offer as being my fee to head the enquiry, not the total budget for the enquiry. The email states quite clearly that other costs of the enquiry are in addition to the addressee’s fee. This is actually normal practise for invited investigators and arbitrators. Many of my engagements in these rolls have be presented the same way.

Invited investigators are there because their specific “brand” carries “integrity” that will pass to the enquiry. At least that is the theory.

The enquiry head then prepares a plan, schedule, resourcing requirements and a budget for the enquiry in consultation with the customer (he/she who pays) and/or the stakeholder representative committee. These plans can be detailed or a only a couple of pages depending on the experience of the participants, the total cost and the complexity of the data collection space. For a 300k enquiry I would expect it to be only a few pages.

In any case, one of the first steps is to define the additional resources and expertise that will be required – these costs would therefore be additional.

So irrespective of the reasonableness of the total fees themselves, it is not apparent to me that a total budget of 40k for the enquiry is what the email contemplated, on the contrary it would seem that the enquiry head charged essentially what he was advised should be the fee.

Now, whether it was appropriate for the customer in this case to advise the consultant what his quote for his fees should be prior to receiving said quote, would be answered by the purchaser’s purchasing policy and procedure manual.